from the totally-out-of-touch-with-reality dept

Eric Goldman points us to yet another example of ridiculous statutory damages rules around copyright creating awards in court cases that have no connection to any real harm. And, this time, it involves the violation of the highly questionable (and controversial) anti-circumvention clause of the DMCA. The case involves an online game, MapleStory, and some people who set up an alternate server, UMaple, allowing users to play the game with the official game client, but without logging into the official MapleStory servers. This kind of thing happens all the time.

In this case, the people behind UMaple apparently ignored the lawsuit, leading to a default judgment. However, even there, it appears that MapleStory went too far, and the judge is clearly annoyed with them at times. Even though judges often side entirely with winners in default judgments, in this case, the judge repeatedly expresses skepticism about arguments made for determining "damages" to be awarded. Thus on most of the claims, the judge seems to look for ways to avoid giving MapleStory much, if any, money. For example, in determining profits made by UMaple, the judge repeatedly knocks MapleStory for failing to show what profits were specific to UMaple's infringement, telling it that it can't just assume all money made by UMaple belongs to MapleStory. So the judge dumps a request for $68,764.23 in profits made by UMaple down to just $398.98.

But... then we get to the anti-circumvention stuff. Here, the ridiculous statutory rates set a minimum of $200 per infringement. Multiply that by 17,938 users of UMaple... and you get $3.6 million. MapleStory, of course, asked for the statutory maximum of $44,845,000, which the court refuses to grant. In fact, the judge chides MapleStory for its request for the maximum -- even to the point of noting that the arguments by MapleStory make it "question very seriously whether Plaintiff intended to actively mislead the Court or whether these oversights were merely the result of poor legal research."

The court then notes that the minimum statutory amount -- the $3.6 million -- is already "a significant windfall to Plaintiff far in excess of any amount necessary to deter future infringing conduct," and also that the "award here likely bears little plausible relationship to Plaintiff’s actual damages." In fact, it sounds like the court would very much like to decrease the amount, but notes that "nevertheless, the court is powerless to deviate from the DMCA's statutory minimum."

As Goldman says, this is "guffaw-inducing", because the minimum award seems to have no bearing on the actual seriousness of the infringement. As he points out:

this case does provide an excellent example of the ridiculousness of anti-circumvention statutory damages. $3.4M can't be the right damages award in this case, and it's so guffaw-inducing that it further erodes the legitimacy of our copyright rules.

Indeed. And yet no one seems interested in exploring just how disconnected statutory damages are from reality.

I don't think anyone defends the statutory damage schemes in the Copyright Act as being anywhere close to approximating actual damages. They're supposed to be a deterrence scheme and an incentive for copyright owners to police their rights even where actual damages wouldn't normally justify the expenditure. Problem is that Congress passed the statutory regime with no idea how lackadaisical our culture would become to strict copyright enforcement over the last 15 years, and as a result, copyright owners can reap windfall profits (where they're even collectible) while the damages do little, if anything, to actually "scare off" other would-be infringers (reminiscent of the RIAA's failed direct lawsuit campaigns against P2P filesharers). Obviously, the UMaple folk are not innocent infringers, but even if you can't cry for the defendants, are the statutory damages really doing their job? Seems like a pure money-grab at this point.

The problem with statutory damages being used as a deterrence, is that in order for them to be large enough to be a deterrence to big corporations, they all of a sudden become a very attractive avenue of revenue for the less than scrupulous.

I seriously doubt that the motivation behind this lawsuit was actually shutting down UMaple. I mean they had to use questionable means just to come up with a damages estimate of $68k. No, I would suggest that whoever makes the call on this sort of thing was shown that they would most likely win the lawsuit very quickly and that the minimum award was $3.6M. Without thinking things through to conclusion (like how they were actually going to collect said award) they approved the lawsuit and the lawyers took off from there.

No, awards should be limited to damages + legal fees. In the case where statutory damages need to be used as a deterrent they should not go to the plaintiff. That's just begging for abuse.

Couldn't the judge have said the installation on the server was the only thing worth of damages? Then it would have been statutory damages times a small number (probably 1). It seems to me that logging into an unauthorized server isn't a separate act of circumvention, only the initial installation and server tweaks should count.

I think this is an example of farstretched simplifications in the law. 200$ is probably a small cost if only one person circumvented it. The infringers could laugh and point at the company in such a case. But because the court automatically assumes linearity the fine is completely insane. Apart from the law appearing far too vague on the issue, they need to implement more reasonable principles for damages like a setup cost and a far lower pr. infringement cost.

Maplestory is produced by DevCat S.Korea and hosted by Nexon NA in the U.S. This is a company that has one of the poorest ratings with the BBB (Grade D) due to a number of factors, some of which are how poorly they maintain their game servers, their lack of proper customer service, and their mismanagement of the players across a number of different hosted titles.

Even though all of their games use the Free to Play model, there is no wonder why players who enjoy the games themselves would try to host their own servers.

If the punishment was "actual damages only", there would be no incentive for anyone to follow the law. If you don't get caught, you get for free, and if you do get caught, you just have to pay "actual damages", which wouldn't be any more than you would have paid before. The risk / return would be insanely tilted towards those who choose to break the law.

The statutory minimums are there for a reason - it gives the courts an easy, simple way to determine what is the minimum for the infraction. The judge doesn't have to do anything except apply it.

Clearly, the people / company involved circumvented, and caused harm. You could spend millions trying to prove EXACTLY how much harm, and it would be useless anyway. As someone pushing CwF+RtB as a concept, you should be painfully aware that the inability to deal with your customers directly (because a third party has circumvented your systems) is extremely costly in many ways.

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"The statutory minimums are there for a reason - it gives the courts an easy, simple way to determine what is the minimum for the infraction. The judge doesn't have to do anything except apply it."

This argument might make sense if the statutory minimums were optional guidelines.

"As someone pushing CwF+RtB as a concept, you should be painfully aware that the inability to deal with your customers directly (because a third party has circumvented your systems) is extremely costly in many ways."

Hahahahaha. If the provider and developer of the official game and client cannot offer a better service than a 3rd-party alternative, the problem is not with the 3rd-party. Also, there is no "inability to deal with your customers." As always, you're delusional.

Lets see, you unlawfully profit from someone else's intellectual property, fail to answer the inevitable lawsuit then snivel about the damages. Tough titty. Maybe you should read the law before you decide to break it.

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The unpleasant truth

What most people do not realise, this type of default judgement, with large minimum awards, actually encourages DRM circumvention.

How so? Lets just put aside the whole is it right / wrong argument to start with.

As it stands right now, the financial impact of a small infringement is of such magnitude that it is for all intensive purposes, no different from a massive infringement.

So, if you are intending to infringe, infringe BIG.

Secondly, when any judgement, uncontested or not, involves that large a sum of money, there are realy only 2 outcomes. The first is all the assests are overseas and can not be touched by the US court system. The second is it goes to appeal and gets tied up in the courts for several years.

So, if you are intending to infringe, infringe BIG.

But it is a detterent I here you say. Not realy, if it was we wouldnt keep hearing about these kind of cases.

All these type of laws do is encourage the very thing they are trying to prevent, provide great fodder for blogs sites, and give plaintiffs flase hope of riches that will never appear.

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If the punishment was "actual damages only", there would be no incentive for anyone to follow the law. If you don't get caught, you get for free, and if you do get caught, you just have to pay "actual damages", which wouldn't be any more than you would have paid before. The risk / return would be insanely tilted towards those who choose to break the law. The statutory minimums are there for a reason - it gives the courts an easy, simple way to determine what is the minimum for the infraction. The judge doesn't have to do anything except apply it.

I totally agree. Statutory damages are about more than just actual damages, and there's a lot of good reasons to use them. But I think the amount of statutory damages needs to be reasonably related to the amount of actual damages. When you get a high multiplier like the one here, even the minimum of the range gets ridiculous. A kid with one iPod full of tunes could be looking at tens of millions of dollars in liability. It's clearly problematic. I think a simple fix would be to make the statutory range suggestive, with a judge having latitude to a variance either up or down depending on the circumstances.

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There is a blatantly obvious way to fix all of this: You make statutory damages not scale whatsoever. Min: $200, Max: $150,000. No relation to how many works infringed or how many copies made. This solves the problem of infringers who cause minimal actual damage going free, because they can still get hit with up to $150,000 if sufficiently egregious. Conversely, if an infringer has made and distributed millions of infringing copies, statutory damages are unnecessary entirely because the copyright holder can rely on the high level of actual damages when there are that many copies.

No, only a jury's finding guilt beyond a reasonable doubt is going to provide a definitive answer. The fact that you assumes he is guilty speaks volumes.

And remember that MU may have left a paper trail and done some stupid things which others are likely not to repeat.

As a non-American, I find the entire notion of punitive damages violative of due process. Punishment should only be dealt out in a criminal trial and not be meeted out under a plaintiff friendly preponderance of evidence civil standard.

For that reason the German constitutional court has held that enforcing American punitive damages awards violates the Basic Law's guarantee of criminal defendant's rights because the evidence does not meet criminal proof.

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"I totally agree. Statutory damages are about more than just actual damages, and there's a lot of good reasons to use them. But I think the amount of statutory
damages needs to be reasonably related to the amount of actual damages. When you get a high multiplier like the one here, even the minimum of the range
gets ridiculous. A kid with one iPod full of tunes could be looking at tens of millions of dollars in liability. It's clearly problematic. I think a simple
fix would be to make the statutory range suggestive, with a judge having latitude to a variance either up or down depending on the circumstances."

No a fix would to be abolishing copyright for non-commercial use and scale back if not completely destroy all anticircumvention provisions of the DMCA

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"Win or lose, he loses."

So even if he is innocent, or his "crime" only amounts to little damage, he loses - not on actual evidence but on atrition

I thought you mention of Kim come had some relation to actual evidence of a person being responsible for clear cut infringement, but you are now moving the goalposts to anyone accused apart from found guilty of infringement.

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Obviously you don't know a damn thing about Maple Story. You see... It was a free game. You could play on their servers but a modified server might have higher (or lower) exp to attain or other modified goods that aren't allowed on the servers of Nexon.

So in essence, the Nexon people are trying to get free money. You want to know where they get their money? From offering products on their servers.

Good job at showing how there really is no risk in suing someone who may have just wanted to play the game differently from the regular way.

A couple of replies

I'm going to reply to a couple of postings here:
First, everyone seems to be thinking that Kim Dotcom will be tried in the USA, what you seem to miss is that the NZ court has to OK the extradition, no OK, no extradition...and the criteria for extradition is very high.

Second, can we please make it legal to shoot anyone who uses the phrase "Intellectual Property" seriously! There are patents, copyrights and trade secrets, and none of them are actual properties. If you want copyright you don't get patents or trade secrets, choose one.

One last thought, it should be mandatory that if you sue over a patent any court proceeding must be stayed pending PTO review, and the PTO review is automatic. For each patent found invalid and rejected the plaintiff must pay the costs of the review.

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While I'm usually against such law suits, and I do think 3.6 million for circumventing DRM is excessive, you can not really fault them here for going to court in the first place. Nexon made the game, and their game clients are being used -- on a rather large scale -- in such a way that Nexon can not profit from it. This is not right. Now, if you like the game and are unhappy with how Nexon handles things, you should write your own, very similar game and distribute your own clients, but you can't just take over their game with custom servers.

Free to play doesn't mean that no money has to be made: look at World of Tanks for example, a highly successful FtP game. Encourage such games. Don't put them out of business by setting up your own servers.

TEAR DOWN THE WALL

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I don't think anyone defends the statutory damage schemes in the Copyright Act as being anywhere close to approximating actual damages. They're supposed to be a deterrence scheme and an incentive for copyright owners to police their rights even where actual damages wouldn't normally justify the expenditure.

You are wrong they were not intended for deterrence - they were simply a way of assessing damages in cases where the actual damages were difficult to calculate. I believe earlier versions of the law allowed actual damages to be substituted where they could easily be assessed - even if that reaulted in a lower award.

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If the punishment was "actual damages only", there would be no incentive for anyone to follow the law. If you don't get caught, you get for free, and if you do get caught, you just have to pay "actual damages", which wouldn't be any more than you would have paid before. The risk / return would be insanely tilted towards those who choose to break the law.

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You're not the brightest color in the box are you?

I bet you think owning any fully automatic weapon is completely illegal too?

Yet, interestingly enough, it's perfectly legal to do so. As long as you can show that you legally purchased said fully automatic weapons BEFORE the law was passed/changed making their ownership illegal.

Sigh. Just another AC grasping at straws and producing completely irrelevant and terrible analogies.

[pats said AC on the head] There there. Personally, I'd go with "not say nothing at all" than come off as a complete idiot or desperate for a reply (even if it's a crappy one).

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"Personally as a European, I don't think you should even have or need an AR-15..."
Be careful, I am European, and your claim that no one need an AR-15 does not take into account the state of gun laws in Switzerland, Germany and the Czech Republic.

Guns for self-defense should be a natural and inalienable right when the state fails to protect its citizens from violent crime.
The European soft on crime justice (not the fake drug or IP crimes but real violent ones) is sickening.

Very cool! Now sue all record and movie companies

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That is the point. You don't own it. You have the non-exclusive right to use. It is a license NOT a good. You don't have the right to the source code. Read a EULA. That is what you paid for. Hence why copyright is broken, it is a right to use not a physcial commodity being stolen and the current generation of users feel entittled to free, as in pay, use.

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Actually Einstein a citizen is not limited ownership of automatic weapons purchased prior to the law banning them from unregulated sale. You can apply for a permit today to purchase an automatic weapon. Sorry you were too stupid to grasp the point that ownership does not convey the right to modify a lawful product into an unlawful one or regulated one.

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(he could be perfectly innocent and yet he's effectively receiving punishment, by having his domain ceased, before a trial. Your post is exactly why he should be allowed to continue until after trial, the government has no business delivering punishment before a trial).

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Hysteria driven by ignorance.

Both of your statements are equally absurd. You can fire an AR-15 fast enough in semi-automatic mode that the full auto mode is pretty much moot. A weapon like that runs out of ammunition fast because it's really not designed to operate that way. It's also prone to quickly jam up as it's not really designed to operate that way.

It really doesn't matter if you fire one shot at a time or 9.

The gun itself really can't handle it. That's why this feature was taken off the military version of the rifle.

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People would speed less if the fine for getting caught was $1,000,000.

And it's fairly easy to tell if you're speeding since the law mandates and accurate speedometer in a motor vehicle, whereas curiously there is often no clear way to tell if you are in fact infringing copyright.

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"Non-commercial copying should never give rise to any damages."

the problem online is that the line between non-commercial and commercial copying is difficult to see.

If you post something on Youtube, is it commercial or non-commercial? Your personal use and intention may be non-commercial, but YouTube will slam ads all around it and over it, making it commercial. You cannot put a video on youtube without it being a commercial use.

You post up something on a video locker, and someone else embeds it into a commercial music blog. Is the use commercial or non-commercial?

"A kid with one iPod full of tunes could be looking at tens of millions of dollars in liability. It's clearly problematic."

Yes, it is problematic. If he didn't pirate the music, he would have no liability. It's so easy to fix things, stop trying to turn the copyright holders into the criminals, they are the victims here.

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Sorry you were too stupid to grasp the point that anti-circumvention is a blanket prohibition that makes modification illegal regardless of the legality of the resulting product. So basically the opposite of this silly gun analogy.

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So, under your spurious definition of justice, because it's hard to tell what the difference is between commercial and non-commercial infringement sometimes we should punish all non-commercial inf ringers more harshly so that we manage to punish the people who actually deserve it?

It's difficult to prove a lot of things in a court and that's not an excuse to just hand-wave around it and increase the punishments for things you can't prove.

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Nexon made the game, and their game clients are being used -- on a rather large scale -- in such a way that Nexon can not profit from it.

*sigh*

How is that Nexon's problem? If they're monetizing content on their servers and making money, then trying to stop people from piracy is impossible.

People like games like Maple Story. They modify it to fit their own purposes. This happens in every game out there. There are official servers as well as unofficial. I can point you to 50 different servers of WoW. I can point to hundreds of alternate servers for the most popular MMOs out there.

This idea that people need to be 100% original is not understanding how people will create with whatever's available to them. If they like a game and create new servers for you, there's a market opportunity there. Someone might not be happy with the exp system. Maybe they have custom mods which show better stats.

Piracy in essence is competition. And Nexon needs to understand that instead of being rewarded for being stagnant.

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And some of the results aren't against the law right now.

It's perfectly legal for me to make copies of music and movies, for instance, for backup purposes or to format-shift (buying a dvd and watching it on a smartphone, for example). It's perfectly legal to reverse-engineer software. It's perfectly legal refill inkjet printer cartridges.

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As someone pushing CwF+RtB as a concept, you should be painfully aware that the inability to deal with your customers directly (because a third party has circumvented your systems) is extremely costly in many ways.

The third parties aren't preventing you from dealing with your customers. You've already lost them, they are no longer your customers -- that's why they went to the trouble of using a different server. If you were serving them properly, they would remain your customers regardless of the existence of third party servers.

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Nope you can do it and with a clean convenience too, the reason being it doesn't matter what the content is, others paid for it and they should be able to do whatever they want with it without being threatened by commercial interests in this case.

Is like Ford saying you can't build a cab company with its cars without paying them for the privilege of using their cars to build a business.

It shouldn't matter who made the software, it should matter only that one service is trying to stop another here without any grounds on reality to do so.

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Yes, it is problematic. If he didn't pirate the music, he would have no liability.

That's true, but you do understand why that's not an adequate answer, right? If it were, then we should just set the minimum fine for any misdemeanor at $1,000,000 and the minimum prison term for any felony at 20 years and be rid of all of these confusing differences in sentencing and the work required to figure out how to apply them.

I don't see the judges issue.. These laws were never supposed to be representative of harm, they are intended to get their authors unearned money. Thats the intent of when the law was made, and thats the result of the case. Justice is served.

Guns in Europe

Because, high gun ownership deters violent crime.
Everyone knows that - I mean, look at violent crime statistics in major US cities like Dallas, New Orleans, Chicago and compare then to London, Berlin, or Paris.

I mean - obviously, the European cities will have far higher per-capita deaths due to violence.

Re: Guns in Europe

You mean the same Chicago, which banned handguns for nearly 30 years, yet still had one of the worst violent crime rates in America during that time?

And do you mean the same London that's in the UK, which now has a higher overall crime rate than the United States, and which in fact rose by 40% in the two years following the infamously strict 1997 Firearms Act?

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Except it isn't the modification that is the measurement, it's the circumvention, which doesn't happen until the connection is made. They word it this way intentionally. The purpose of the lock is to lock the clients to connect to a particular server. The lock is circumvented when the clients connect to other servers. The modification is not the circumvention, it's what enabled the circumvention. It's not even one per client, it's one circumvention per connection.

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To draw a physical analogy, if someone has a locked door in the way where people want to walk and another person builds a bridge over the door, then every person who walks over the door using the bridge is getting around the lock (circumventing it) the bridge itself is an enabler of circumvention, not an act of circumvention.

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John, the idea of any penalty, fine, or statutory minimum in a civil action is to create enough of a deterrent so that people do not feel that the risk is worth the reward.

I personally object to the idea of getting a $300 ticket for going 20 MPH over the limit on an interstate, while a guy who punches another guy in the face in a bar might get a $50 fine. For me, it seems stupid that actual bodily harm (and a lack of respect for others) comes in with a lower price than speeding. Yet, I can understand the deterrent factor in the high fines.

A good example (and Marcus will appreciate this) is the great dictatorship of Ontario. There, they passed a speeding law that allows the police to immediately seize the car of people doing more than a certain amount over the limit as "racing" on a public road. The effects have been quite pronounced, as the risk for speeding is now high enough that even the stupidest of drivers generally only do 30/Kmh over the limit, because it's only monetary. At 40 or 50 over, (50 is about 30 MPH) over, your car is immediately seized.

While your examples are exaggerated, the truth is somewhere in the middle. $200 for an infringement isn't really a bad thing, no worse than $35 for parking ticket. You can still run up a big pile of money if you do it the wrong way.

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"the problem online is that the line between non-commercial and commercial copying is difficult to see."

So, perhaps instead of trying to sue inadvertent infringers out of existence, you should be working on clearing this up first? You're never going to eradicate piracy if it's so difficult to tell if you're committing infringement in the first place, are you? How do you stop people committing a crime if they can't tell whether they're committing it to begin with?

"If he didn't pirate the music, he would have no liability."

You'll note that he didn't say "iPod full of pirated tunes". Perhaps he didn't pirate them. Despite your objections and assumptions, it's perfectly possible to have a full iPod without breaking any law.

"stop trying to turn the copyright holders into the criminals, they are the victims here."

Citation needed on actual quantifiable damages. I can see actual damage being done to inadvertent and innocent parties. I'm yet to see any damage done to copyright holders that's not purely based on assumptions and cherry-picked data (e.g. discounting any of the hundreds of other factors than piracy when looking at the downswing in recorded music sales).

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"And it's fairly easy to tell if you're speeding since the law mandates and accurate speedometer in a motor vehicle, whereas curiously there is often no clear way to tell if you are in fact infringing copyright."

Well, we need to fill our for profit prisons some how.
If you build it, they will be incarcerated.

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John, the idea of any penalty, fine, or statutory minimum in a civil action is to create enough of a deterrent so that people do not feel that the risk is worth the reward.

Actually, I don't think this is true with regards to statutory minimums, although that's certainly the theory behind some kinds of (but not all) penalties. The purpose of statutory minimums is to limit the ability of a judge to actually exercise judgement in the cases they're presiding over. It's a way to weaken one of the checks & balances we have.

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As an American, you'll be glad to know no one here cares what you think.

As for this fantastic example of how batshit retarded the DMCA is, they probably should have made an attempt to defend themselves legally.
It's also nice to know there's a judge out there who realizes this ruling will not accomplish anything in the long run except hurt consumers.

Regarding DMCA

Idiocy.

This is idiotic. I realize Alex, the founder of Umaple, broke laws, but 3.6 million dollars? Not that many people actually played his Private Servers. People quit playing and some people made different account. They're only actually calculating how many people were signed up for their forums. Not how many people actually played. I played this server too. There are dozens more and Umaple was just the most famous, by far. The best as well. There are tons of maplestory private servers, and just because the best one went down, it doesn't mean more people won't get away with it. Obviously. So for those of you, going on about how right this is, or judging this without any prior knowledge, think again. Umaple also had legal protection. Terms of Service, Terms of Agreement, and other things that everyone had to go through before registering and going on the different websites. Umaple was hosted in another country, Russia or Sweeden. I can't remember, well those countries don't notify you about lawsuits and things like that. Something with their laws on the issues. I'm not completely sure of my legal arguments, but I don't think they're worthless ether. Bankai FTW, RIP Bankai. Where U at mang?! (Umaple Slogan).